Building A Small Business Customer Loyalty Program: 17 Creative Ideas to Keep Customers Coming Back

Mike Graner
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2023-02-14

Marketing advice mainly focuses on growing your audience and expanding your reach. While both are vital for building a business, not enough is said about the importance of cultivating brand loyalty with customers. As such, it's essential to focus on existing customers because they spend 67% more than new clients and will also help you build an immensely loyal customer base, which is crucial for success. (Bain & Company)

In this post, we explain what a customer loyalty program is, its benefits to your business, how to create an effective program, and 17 creative ideas to keep customers coming back. 

What is a customer loyalty program?

A customer loyalty program is a marketing strategy that recognizes and appreciates clients who engage with your business or brand regularly. These programs often provide two functions: rewarding repeat customers for their patronage and helping the company understand their clients better through a wealth of customer data. 

A customer loyalty program offers rewards that could be anything from bonus points or perks to upgrading clients to higher loyalty levels where they can get early access to products or services. While such programs can seem costly for many small businesses, throwing a reward or giving freebies during the purchase is an excellent way of reinforcing a client's buying decision. 

The benefits of a customer loyalty program

With consumer data collected from your customer loyalty program, you get additional insights into the products or services most clients purchase, upsell potential, and what products are frequently purchased together. Over time, the results of your loyalty program can teach you which incentives work effectively or whether you need a new approach. 

A customer loyalty program could offer your small business numerous other benefits, including:

●     Customer retention: In the current market, consumers are making purchases based on shared values, overall experience, and engagement with a brand, meaning the focus isn't just on price.

●     More referrals: If your clients find your loyalty program beneficial and enjoyable, they'll refer your business to their family members and friends. 

●     Cost efficiency: According to Huify, retaining your current clients is approximately five times cheaper than attracting new ones.

●     User-generated content (UGC): The program encourages consumers to leave reviews and ratings that are more authentic, and the client also becomes an indirect ambassador for your brand.

How to create an effective customer loyalty program

A customer loyalty program can prove essential for your small business since it gives you an edge over your competitors. Here's how you can create a program for your small business:

1. Establish trust

Trust is vital to a working customer loyalty program, and you can secure it by promoting a customer-centric culture for your business. According to Wunderman, more than 79% of consumers want to see brands demonstrating that they understand and care for them before making a purchase. 

For most small businesses, the challenge of aligning their brands with customer's values can be significant. Still, it's an opportunity to create personalized and informed customer experiences across sales, marketing, and customer service. 

2. Embrace new technology

Technological advances have made it easier to build a working customer loyalty program. According to OutterBox, about 79% of smartphone users made purchases using their mobile device within the past six months. This means a substantial percentage will also access their rewards through an app, demonstrating that technology is an essential requirement for your customer loyalty program. 

3. Study your current clients

A customer relationship management (CRM) system is a tool that helps businesses administer customer interactions using data analysis to study large amounts of information. The system records calls, messages, emails, and other information specific to a single client. With this information, you can create personalized customer experiences that boost their trust in your brand. 

4. Create a simple points system

Since this is the backbone of the customer loyalty program, it's essential to start with a simple points system that you can build on. The relationship between tangible rewards and points should be as intuitive as possible because being unable to redeem points can be a huge setback for your program. Making acomplicated customer loyalty program risks the chance that the clients won't understand it. 

5. Offer different levels of rewards

A tiered reward system starts by offering small points or rewards when the client makes their first purchase. As the customer spends at a higher level, the value of their rewards increases. This system is quite effective in small hotels, airlines, and insurance businesses.

6. Enhance your customer service

Effective customer loyalty programs rely on the insight you have into your clients. A multi-channel service approach ensures the client gets the best and most consistent experience across multiple platforms, channels, and devices. Adopting a multi-channel customer service system before implementing the program helps you connect more with your customers, especially when there's an issue. 

7. Collaborate with another company

As a small business, funding new tools and programs can be an issue when it comes to many projects. If you're in such a dilemma, you can partner with other companies to offer a rewards program. By giving customers value that exceeds what you can offer, they get the impression that your business understands and cares for their needs. Additionally, you could grow your business by leveraging your partner's network. 

8. Offer distinctive awards

Your loyalty program shouldn't focus solely on offering discounts; instead, it should be about providing rewards that the clients want. Personalized rewards are more likely to entice customers to complete purchases since they are customized to their needs and wants. 

The rewards could be anything from free tickets to an event to donating a percentage of the sale to charity. Using customer browsing and purchase history data helps you understand the interests of each customer and the most suitable rewards. 

How to keep customers coming back: 17 creative ideas

According to Forbes, approximately 20% of all small businesses fail within the first year, and nearly half will have failed by the fifth year. With such high rates of failure and the cost of attracting new clients, small businesses should focus on retaining their current client base for success. 

Here are 17 creative ideas that will keep your customers coming back:

1. Apologize when you make mistakes

96% of customers would keep their relationships with businesses that apologize and address mistakes

As much as businesses try to avoid them, mistakes are inevitable. Mistakes from data breaches to delivery mix-ups and billing errors can put your business at risk of losing customers. Apologizing to customers is usually challenging, and knowing how to take responsibility for your actions is a skill that could help you retain clients even if the mistake has devastating consequences.

HubSpot reveals that about 96% of the respondents would retain relationships with a business after a mistake if they apologized and addressed the issue. Therefore, devise a plan for handling errors and offer apologies to ensure the maximum retention of clients. 

Here are some tips to help you when apologizing for your mistakes:

●     Say sorry: The first step is saying sorry for the mistake your company made. It's human nature to defend ourselves by shifting the blame to others. A simple apology shows that you're not trying to be defensive about the issue, which goes a long way in resolving the mistake.

●     Admit you made a mistake: Take ownership of the mistake on behalf of the company even if you don't believe you did anything wrong or it bruises your ego. By admitting the mistake, you prove to be authentic and human, boosting the client's trust in your business by verifying that you're honest. 

●     Explain what happened: The best way to calm down unsatisfied customers is by proving to them you listened and understand what your business did wrong. Try empathizing with your clients by explaining the issue briefly, including how the mistake came about and what an employee might have done to cause it. 

●     Acknowledge the customers' goal: Clients understand that mistakes happen, but they shouldn't affect the bottom line. If the error prevents the customer from reaching their objective, you should acknowledge the issue to make your apology more sincere.  

●     Offer advice on the way forward: Offer customers a solution to the problem and assure them that you'll change based on the incident. This shows your effort in trying to help solve the issue or avoid future mistakes. 

2. Adopt customer service tools

Any system that focuses on helping businesses communicate with customers can be considered a customer service tool. With the right tools, your business can also track and analyze high volumes of customer data, providing your company with key insights.

Service tools are not only beneficial to the clients, but customer agents at your company can also have a better work experience, translating to increased productivity and motivation. You could also create a self-service knowledge base that allows clients to solve some problems independently. Additionally, clients are more likely to continue doing business with your company due to improved service and guaranteed satisfaction. 

Customer service tools come in different variations, including:

●     Knowledge base self-service: This could be a simple website containing information on some frequently asked questions (FAQs) about your products or service. The information should be organized based on categories, and the website should feature a useful search function. 

●     Live chat: With live chat, clients can directly connect to your company's customer representatives. Clients can send messages remotely from any platform or device and connect to an agent at all times. 

●     Help desk: A help desk allows businesses to manage clients' emails in-house instead of relying on a third-party provider like Gmail. These tools make it easier to manage, track, and tag large volumes of emails. 

●     Call center: These centers are responsible for answering and managing all customer phone calls. The tools remain a crucial part of any customer service system because they effectively solve client-related issues.

●     Social media and messaging: Businesses are starting to adopt messaging as part of their customer service to attract younger generations. Due to their convenience, you can manage messaging on platforms such as WhatsApp and Facebook Messenger. 

3. Be consistent with your values

Sometimes it's not how effective your strategies and tools are but what your company stands for. Doing good is becoming more critical among many consumers. As a business, you should understand that modern consumers are more interested in their buying habits' environmental and philanthropic effects beyond the purchase. Your business may want to consider strategies to address even your consumers’ political concerns.

For example, in response to mass shootings in the U.S., retailers such as Dick's Sporting Goods and Walmart raised their gun buying age to 21. (The New York Times) However, your values don’t have to be overtly political. TOMS built its business around making the world a better place through its "one-for-one" policy, meaning that for every pair of shoes purchased, it donates a pair to needy people.

The key to being consistent with your values or mission is finding something your customers care about and positioning your company around it. For instance, one urrent trend revolves around funding eco-friendly initiatives. You can start a program that donates proceeds to one such cause. 

4. Leverage personalization

Personalization means tailoring customer experience based on information about their history with the company. Consumers aren't only demanding to be treated as people, but they also need to feel a human connection when interacting with your company. If your business is not using data personalization to build brand loyalty, then you and your customers are losing out.

To leverage this idea, first establish authenticated channels that make it easy for clients to identify themselves and how they can be served in personalized ways. The second step is connecting your team with the right client profile data, including previous interactions with the company in the form of a shopping cart, website, and mobile activity. With such data, your team can offer new levels of data-driven personalization, removing the long process of surveys. 

Personalization is also crucial for some customer service tools, such as chatbots, which can make interactions feel unnatural or awkward. Personalized technology leads to more comfortable interactions between the client and your automated tools, leading to more AI conversations. The more types of data you collect on an individual, the better you can understand and cater to their needs and expectations. 

5. Focus on your clients and not competitors

One thing that most influential companies have in common is that they disrupted their respective industries by being customer-centric. Amazon, an e-commerce giant, has a leadership principle known as customer obsession, where decision-makers start with customer needs and go backward, working vigorously to earn and maintain consumer trust. Because competitors pose a risk of poaching clients from your company, focusing on your clients’ needs first can give you the edge you need to compete.

With consumers shifting fast to digital technology, many small businesses are finding it hard to keep up. To remain attractive to your existing client base, start thinking non-linearly and stay flexible. To that end, your business's greatest challenge may not be your competitors but rather keeping up with the digital demands of your customers. Additionally, clients' expectations are no longer based on the industry; they tend to be more liquid. Therefore, they often expect you to be where they are and deliver their order when and how they want it.  

Your clients don't often compare customer services; they do business where they receive the best service. Clients want to be empowered, not controlled. The shift from control to empowerment means changing some of the basic building blocks of customer engagement, especially on funnels and channels. Focus onbuilding a business based on authenticity, reciprocity, and transparency, which will help the customer do what they want. 

6. Capitalize on social proof

Social proof is a psychological concept that revolves around the idea that humans are pack animals and are looking for social acceptance. Social proof assumes that people will conform to your brand if there's evidence of other people purchasing your product or service and finding value in what you offer. In marketing, social proof can take the form of reviews, referrals, and media coverage. 

You can incorporate social proof in your marketing strategy in several ways, as shown below:

●     Expert: With expert social proof, you leverage the recommendation of an industry expert. A Twitter shoutout by an expert is an example of this concept. 

●     Celebrity: You can hire a celebrity to endorse your products or services, luring their fan base to your brand. Celebrity social proof can also be achieved through the use of influencers on different platforms.

●     User: This is when current customers recommend your services or products based on their experience with your brand. It could be a positive rating on review sites or their social media pages.

●     Friends and Family: The wisdom of your friends is a social proof method where potential clients see their friends and family approve of your products or services. It could also be used with the wisdom of the crowd, which is when a large group of people endorses your brand. 

●     Certification: Having a stamp of approval from an authorized body in your industry is proof that implies your products or services meet quality standards. It could be anything from a verification badge on your social media pages to the actual certification from bodies like the International Organization for Standardization (ISO).

7. Educate your clients

Even if your clients purchased from you before, you should not stop trying to close the deal. In an increasingly connected world, clients always have more options than they can choose. You can drown out the other voices and options by going the extra mile and offering something invaluable, like educational tutorials and guides.

With a strong education program for your customers, you create a fast, more efficient onboarding process. This is a vital factor for any client educational program since it provides an opportunity to educate clients on the value of your brand, enhances trust, instills loyalty, and boosts customer retention. 

Even though customer education can bring more business your way, it's not all about earning more revenue. You should take a strategic approach to building programs that resonate with different customers, so consider offering in-depth educational programs with certificates that add real value to your clients. So, let’s say your company runs a free graphic design app. You can offer a quick-start guide for your customers after an initial installation; then, you can offer in-app upgrades that teach your customer how to be design pros using your software.

8. Provide incentives before membership termination

At some point, everything has to come to an end, and as a small business owner, you should devise ways of retaining your clients before they terminate their membership. Implementing the right strategy increases the average lifetime value of your clients, as opposed to seeking spontaneous purchases from random clients. 

For example, when your graphic design app’s membership is almost at its end or when a client tries to cancel the membership earlier, try giving them an option of two free additional months if they retain their membership. 

9. Build trust with clients

According to a recent report, trust plays a massive role in the success of any customer loyalty program, with 82% of consumers claiming they'll continue using a specific brand regularly if they trust it. (Aon) Additionally, 83% will recommend it to their friends and family. There are many ways of enhancing trust among your clients, and one of the best ways to achieve this is by showing them that they're valuable assets and you can solve their unique needs.

Earning your client's trust usually starts with excellent customer service and consistency. Your team should offer the same levels of service and be equipped with the right tools to ensure they serve clients efficiently. Other factors to consider when building trust are honesty and transparency. Many businesses may have difficulty understanding what transparency means. 

To attract repeat and long-term business, remember that clients must continue trusting you to deliver on your promises. Clients will outright know when you're lying to them and when you're telling the truth. Honesty is crucial, especially after making a mistake. To ensure you implement transparency effectively, you must lead by example and address issues directly.  

10. Create a community behind your brand

With more than half of the global population using social media combined with the availability of avast online marketplace, consumers have access to tons of information about a company, allowing them to make informed decisions on where to make purchases. Brand communities allow your most loyal clients to meet in one place where they can share their experiences with your brand. 

Although you may already have a brand community on different social media platforms, finding them might be moderately challenging. Clients in your brand community aren't only loyal, but they're also emotionally invested in your brand and will go out of their way to defend or promote your brand. To create an army behind your brand, you must first find the soldiers, connect directly with them, and build a strategy that allows everyone within the community to communicate with one another. 

11. Become part of the client's lifestyle

Gone are the days when all you had to do to attract new or maintain existing clients was to run an emotional advertisement. The market has evolved and grown tired of traditional adverts. To stand out from the crowd in the current market, you must create an enticing mood around your products or services that makes clients want to make your brand part of their daily life. 

Lifestyle marketing allows a brand to connect with its target audience's values, ideals, and aspirations. Try demonstrating to the client that your product or service will move them closer to reaching their life objectives. Consumers want to connect with brands that are more aligned with what they believe in, and if your business shares the same interests, lifestyle marketing would be the strategy to proceed with. 

12. Use gamification and referral programs

To make your customer loyalty program more fun, you can implement gamification and referral programs in your strategy. In marketing, gamification is using game mechanics and techniques to make customers more interested in promoting your service or product. Consider the elements that get you hooked on a particular game, such as advancing through the levels, accumulating points, competing among other players, or unlocking achievements. 

Gamification as a marketing strategy started gaining traction in the 2010s and has grown steadily over the years. The reason gamification is so effective is that playing games release serotonin, among other neurochemicals, a hormone responsible for evoking feelings of happiness. (StriveCloud) All these elements can potentially make your loyalty program more engaging for your clients. 

Before implementing gamified referral programs, it's essential to gauge whether it's the appropriate solution for your audience. Additionally, ensure you have the resources and tools to gamify your loyalty program appropriately.  

13. Implement corporate social responsibility (CSR)

Corporate social responsibility is a self-regulation practice that helps businesses contribute to societal goals of a philanthropic, charitable, or activist nature by participating in or supporting ethically-oriented practices. Today, a company is more than what it offers because consumers constantly look at what the business buys, sells, and advertises to its clients. 

Based on your customer's values, you can create a CSR program that focuses on a moral goal. The initiative doesn't have to be ambitious; you can choose to be more involved with your consumer's personal and community goals. If your customers detect any inconsistency between your actions and brand image, they'll quickly inform you, and you can make the necessary amendments.  

14. Hire a beta testing group

A beta testing group serves dual purposes in your customer loyalty program—it provides your business with actionable results and observations from the final user's point of view. It's also a great way of keeping users interested in your new features. 

The testers are usually an exclusive group of users, including your clients, who are enticed in various ways to commit for a few weeks or months to try out your products or services. You can use monetary payments or gift cards and coupons to persuade the beta testing group. 

15. Use a customer advisory board

Long-term clients are the most valuable people in your business not only because of their expenditure but also the wealth of information they provide. In many cases, they're vocal about what they love about your brand and will point out some areas they feel need improvement. 

Creating a panel or board of such clients is an excellent way to fine-tune your product or service to meet the dynamic demands of the market. You can also increase customer advocacy by encouraging board members to share their reviews publicly. 

16. Create onboarding programs

Onboarding can be vital in client retention because it prevents the agitation of new clients since they understand how your brand works and don't waste time learning about your products or services. These programs help new clients understand more about your catalog. Rather than leaving your client struggling alone, you can select a company representative who primarily focuses on training new customers based on their needs. 

17. Thank your customers

Taking the time to thank your loyal customers outside of a customer purchase or email campaign goes a long way in building a memorable and lovable brand. Zappos, a clothes and shoe e-commerce website, is famous for its excellent customer service, including the effort they take to demonstrate to its clients that they care by sending gifts and saying thank you. While it may seem simple, saying thank you is one of the most effortless ways of retaining clients. 

Contact Smith.ai for help maintaining your customer loyalty program

As a small business, you stand to gain a lot from implementing a customer loyalty program, but most owners don't have the time or the skills to execute an effective program on their own. If you're having trouble maintaining such a program for your business, we can offer professional assistance. 

Our virtual receptionists know how to keep the conversation with your customers going—from the first interaction and beyond. You can use Smith.ai to manage all important communications with your new and repeat customers, including:

●     Facebook chat answering: When you set up Facebook messaging, you can ensure your customers get prompt replies to their questions.

●     Call answering and call-backs, complete with call summaries: Our agents can speak with your customers anytime, day or night. They’re also trained to give the most up-to-date information about your business and rewards programs.

●     Live-staffed website chat service, complete with chat transcriptions: Rest assured that your customers will feel that human touch when they use live chat features on your website—and you’ll capture the data you need from those interactions.

●     SMS text answering: If you get texts from customers, we can reply and keep your existing or new customers happy.

●     CRM integration: Get a record of when customers contacted you withdetails about calls and chats—all logged into your CRM.

If you're ready to handoff call answering, Facebook Messenger replies, call-backs, and other communications crucial to your loyalty program, sign up for a free 30-minute consultation with our team or get started risk-free with our 14-day money-back guarantee. Contact us for more information by email at hello@smith.ai or chat with us live right here! We’re ready to help you serve your customers now.

Tags:
Business Education
Small Business
Mike Graner

Mike Graner is the Marketing Manager at Smith.ai. He focuses on engaging content, company updates, and in-person events.

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